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carriers to be unjust and unreasonable and ordered this practice stopped because the five carriers involved had established competitive rates which were tending toward unremunerative levels. The Commission concluded that higher rates on automobiles would allow: "a sufficient number of carriers to remain in the trade adequately to maintain the transportation of basic foodstuffs and products for ‘Operation Bootstrap' at a level which will not endanger the health of the overall Puerto Rican economy”.

Sea-land is the principal carrier from the U.S. Atlantic Coast ports to the Island, especially on general merchandise and foodstuffs. In addition to moving the bulk of traffic (ch. III) between the U.S. Atlantic ports and Puerto Rico, it transported two-thirds of all southbound traffic and slightly more than one-third of all return cargo.

" 81

5. Commodities of Importance to the

Commonwealth

The overall economic wellbeing of Puerto Rico and future industrial development on the Island will depend to some extent on the availability of reasonable rate levels on certain basic cost of living foodstuffs, semimanufactured and raw materials, as well as capital goods, imported from the U.S. mainland. Although it may be that certain of the foods and manufactured goods could be locally produced in the foreseeable future, unless the Island attains a higher degree of selfsufficiency than now appears likely, many essential foodstuffs and raw materials must be imported to foster the economic development of Puerto Rico. The commodities which the Commonwealth considers most important to the economy are discussed below.

The Commonwealth imports large quantities of foodstuffs to feed the people of Puerto Rico. Appendix B lists the food items which, according to the Commonwealth, are most important to the consumer's cost of liv. ing. This list was developed jointly by the Puerto Rican Department of Labor (Cost of Living Division), and the Puerto Rico Ports Authority. In an analysis contained in chapter IV, the ocean freight rates applicable to these commodities are discussed in some detail. In addition, chapter V undertakes an examination of the effect ocean rates have on food prices as well as on cost of living in Puerto Rico. As indicated previously, the Commonwealth imports large quantities of semimanufactured goods and raw materials, or intermediate

goods, which are processed into finished products and exported, largely to U.S. mainland markets. Appendix B also lists the intermediate goods which, according to the EDA and Puerto Rico Planning Board, are important to the Island's industrial development. In addition, the specific reasons why these commodities are important to the Commonwealth were filed with the FMC by the EDA. This material is included in appendix B.

The Commonwealth believes that the general development of the economy will be aided by reasonable rates not only on cost of living foodstuffs, but also on certain essential industrial products which are destined to compete with products in the U.S. mainland and in foreign countries. On some commodities, because of this importance to certain industries, even slight variation in the rate levels may have a critical effect. According to the Commonwealth, the commodities because of their nature and need in basic industry requiring reasonable rates include: acids, agricultural implements, industrial alcohol, boxboard and paperboard, carbon black, carbon electrodes, petroleum refining catalysts, synthetic resins, rubber, urea, feed and feedstuffs, hides, and yarns (app. B). Many prominent locally established industries, like those producing textiles, paper, metal, and leather, depend almost exclusively on imported raw materials for their survival and expansion. Other prospective industries must also rely on intermediate raw materials produced locally through the processing of imported basic raw materials. The success of these in. dustries will be linked to their degree of competitive penetration into the Mainland market. As competition tightens through rising wage levels, reductions in for. eign trade tariffs, and rising costs of materials, the need for reasonable rates on the foregoing commodities becomes more important. There is a general agreement that low freight rates are important to industrial development, and it follows that American shipping companies may derive substantial benefits in relation to the increased freight revenues generated by greater traffic flows.

6. Petroleum and Bulk Cargoes

Chart II-4 (p. 11), further illustrates that Puerto Rico's 1966 petroleum and bulk traffic amounted to 14.40 million tons.82 Of this 14.40 million tons, petroleum traffic moving between Puerto Rico and the Guayanilla, P.R., and Phillips ships gasoline and aromatics from Jobos, P.R., to the U.S. mainland.

** The 14.40 million tons of petroleum and bulk cargo represented an increase of 70 percent over the 8.50 million tons of 6 years earlier. Most of this increase occurred between Puerto Rico and foreign countries.

81 FMC docket No. 1167, Supra, p. 410.

7. Foreign Traffic

U.S. mainland totaled 3.84 million tons and the balance consisted of Puerto Rico's petroleum and bulk traffic with other world markets. Tanker traffic between the U.S. mainland and Puerto Rico increased approxi. mately 75 percent between 1960 and 1966, from 2.20 million in 1960 to 3.84 million tons in 1966.83

Virtually all of the petroleum and bulk traffic moving between the U.S. mainland and Puerto Rico is transported from the Island to points of destination located in the U.S. North Atlantic in vessels operated by Gulf Oil Corp., Standard Oil Co. of New Jersey, The Texaco Inc., Mobil Oil Corp., and National Bulk Carriers which is used by the Commonwealth Oil Refining Co. (CORCO), one of the leading shippers of petroleum. Other large shippers are Phillips Puerto Rico Corp. (Phillips), and Union Carbide.84 The leading shipments from Puerto Rico to North Atlantic ports are refined oil, jet fuel, petroleum products, alcohols, gasoline, and chemicals.65 Union Carbide and CORCO ship their refined oil and petrochemical products from

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The Island's 1968 foreign purchases of $385.3 million represent a gain of almost 13 times over the foreign imports of 1950 ($26.7 million). The principal foreign sources of supply were in South America. Appendix A, table 5 contains Puerto Rico's trade distribution with Caribbean, South American, and Central American countries from 1960–67.86 Puerto Rico's principal foreign imports consisted of hardwood lumber and corn from the neighboring Dominican Republic together with some minor volumes of food items like poultry, eggs, and cheese; wines and brandies from Spain, France, and Italy; passenger cars, drugs, whiskey, tractors, spark plugs and electrical appliances from the United Kingdom; chickpeas, garlic, and beans from Mexico and Chile; anatto seed from Ecuador; olives, capers, and olive oil from Spain and Italy; fish products from Canada, Iceland, and Norway; 87 footwear, cod, pimientos, printed matter, and books from Spain.88

The Island exported small quantities of Puerto Rican products ($84 million) to foreign countries in 1968.

* Sources: (a) Puerto Rico Ports Authority “Movimiento de Carga Seca у Total por Los Puertos de San Juan, Ponce, Mayagüez y Puerto Rico, Ano Natural 1957 AL 1966", (San Juan: Ports Authority, July 26, 1968); (b) U.S. Department of Commerce, Maritime Administration, Domestic Oceanborne and Great Lakes Commerce of the United States (Washington: Government Printing Office, 1957–67), various pages; and (c) U.S. Bureau of Census, U.S. Waterborne Foreign Trade, FT 985 (Washington: Government Printing Office, 1967), various pages.

84 Puerto Rico, EDA, Official Industrial and Trade Guide to Puerto Rico, (San Juan, P.R., 1967), pp. 415-422.

$5 U.S. Department of Commerce, Bureau of Census, U.S. Trade with Puerto Rico and U.S. Possessions; FT 800 (Washington: Government Print. ing Office, August 1967), p. 13.

* John T. Rigby, Commonwealth of Puerto Rico, Direct Exhibits of the Commonwealth of Puerto Rico, United States-Caribbean-South American Investigation Civil Aeronautics Board Docket 12895, Exhibits CPR-309, CPR310, and CPR-311 (Washington : Arnold, Fortas and Porter, January 25, 1965) and, External Trade Statistics, op. cit., various years.

87 West Indies and Caribbean Yearbook, 1966, p. 720.
&$ Puerto Rico Planning Board, External Trade Statistics, 1967, op. cit., p. 275.

CHAPTER III

TRANSPORTATION SERVICES IN THE PUERTO RICAN TRADE

A. GENERAL

1. Introduction

2

1

3

Puerto Rico's transportation system can be looked upon as a model for containerization services in the world's ocean trade routes. This trade is served by eight common carriers competing for the available traffic without Federal subsidy 1 or protective conference systems. In 1967, approximately 81 percent of the 3.4 million weight tons of dry cargo flowing between the U.S. mainland and Puerto Rico (chart II-4, p. 11) was moved by the eight American shipping companies.

The discussion of transportation services in this chapter primarily deals with common carriers, but also considers contract carriers, air carriers, and Puerto Rico's highways and roads. The sea transportation system is illustrated in chart III-1.

Puerto Rico is served from four U.S. mainland trade regions including the North Atlantic region, the South Atlantic region, the Gulf region, and the West Coast region, each having its own unique modes and combination of carrier service, competitive situations, voyage patterns, rate levels, and commodity flow. The analysis, therefore, follows the regional approach.

Throughout 1968, the eight carriers provided regular lift-on/lift-off, roll-on/roll-off, and breakbulk services on scheduled frequencies between the U.S. mainland and Puerto Rican ports, including San Juan, Ponce, and Mayagüez. These carriers are Sea-Land Service, Inc. (Sea-Land); Seatrain Lines, Inc. (Seatrain); Transamerican Trailer Transport, Inc. (TTT); Motorships of Puerto Rico, Inc. (Motorships); ? South Atlantic & Caribbean Line, Inc. (SACAL); TMT Trailer Ferry, Inc. (TMT); Gulf Puerto Rico Lines, Inc. (GPRL); 3 and Lykes Bros. Steamship Co., Inc. (Lykes).

Sea-Land, the principal carrier in the Puerto Rican trade, provides containerized services from and to three regions. In the North Atlantic region, it provides connecting services from the ports of Elizabeth, N.J. and Baltimore, Md. Sea-Land also provides service from the South Atlantic. In this region, Sea-Land provides connecting service from and to Charleston and Jacksonville. Seatrain has moved containers and railcars from New York since 1963; Motorships has operated from New York since 1963; and TTT, operating a new large roll-on/roll-off trailership, commenced operations from New York in April, 1968. At that time, TTT's predecessor, American Union Transport, Inc. (AUT), a breakbulk carrier, discontinued regular service from New York to San Juan, Ponce, and Mayagüez. In the South Atlantic region, TMT, which inaugurated service in 1953, provides roll-on/roll-off service from Jackson

1 Section 805(9) of the Merchant Marine Act of 1936 prohibits the use in the Domestic Offshore trades of vessels whose construction and operation has been subsidized under the provisions of the 1936 Act unless written per. mission is first obtained from MARAD. This permission is granted only upon a favorable finding in a hearing at which all interested parties have the opportunity to participate. Vessels operating under such a waiver may not receive operating subsidy during such operation and must refund a propor. tional amount of the construction differential subsidy.

2 In 1968, Motorships temporarily discontinued service to and from Puerto Rico.

3 Waterman of Puerto Rico, GPRL's predecessor, operated in this trade between 1910 and 1965.

CHART M-1
MAJOR TRANSPORTATION SYSTEMS AND REGIONS:
U.S. MAINLAND - PUERTO RICO and THE VIRGIN ISLANDS

1969

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PUERTO RICAN - VIRGIN ISLAND TRADE STUDY
FEDERAL MARITIME COMMISSION

1969

ville and Miami to San Juan; * and SACAL, which entered the trade in 1962, provides a combination of roll-on/roll-off and lift-on/lift-off service between the same ports.

In the Gulf Coast region, GPRL, which inaugurated service in 1940 under the name of Waterman Steamship Corp., operates to and from New Orleans and other Gulf ports; 6 and Lykes, which has provided service

* TMT was the originator of the roll-on/roll-off trailership operation in this trade.

5 TMT and SACAL have at various times carried a very limited amount of breakbulk cargo.

• GPRL, which is a wholly owned operating subsidiary of McLean In. dustries, adopted the present name in 1965. This carrier was the successor to Waterman Steamship Corp. which inaugurated service to and from Gulf ports in the late 1920's.

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